I agree with GS, I feel no obligation to bail out anyone. What you describe above is the loaner and/or loanee failed to do their due diligence and will suffer for it, as they should. The people whose fault it is should bear the burden, not me. And it is the fault of the loanee if they got in over their heads, no matter how seductive the sales pitch. It is telling you threw in the hospital bill example, as it is more likely a plasma TV.
In my "economic" opinion we failed the second we started bailing out the system, period. We should have let the the system that was in place do its job and the problems would not have come to where they are.
That said, we failed as a Government to appropriately regulate the financial sector to insure that is was maintaining fiduciary responsibility [yes, that is one of the legislated roles of our federal government]. We allowed institutions to make loans that they legally should not have been allowed to make, many without verification of employment or income, many without inspection of property and many without proper checks and balances we expect of financial institutions.
It was not all their fault, many borrowers used their home equity as an ATM. Many refi'ed every February to clear up the credit card addiction. Many bought into the "everything is roses economy" that was being broadcast on advertiser based TV. They FAILED also.
The problem now is that you have a snowball that is so large that unless something is done, the result is worse than the "let them suck it up" answer because while the financial sector will collapse and millions of homeowners will lose their homes, the cascade effect will be staggering if nothing is done to soften the landing.
Is it the "right" thing to do for those of us who have no debt and paid attention and did the right thing and now have to cover another bailout like the Savings and Loan or HMO failures? NO. But the recession and its aftermath if we do nothing will cost us much more. And that is the conundrum.